Wellard signs Joint Venture in China with Fulida Group

13 August 2015

Western Australia’s second largest agribusiness, Wellard, has entered into a formal Joint Venture with one of the top 500 non-SOE companies in China, Fulida Group, to supply and market Australian cattle and beef into China.

Wellard and Fulida are 50-50 partners in the Wellao Joint Venture, which will first commence exporting and marketing Australian beef into China while it progresses the design and construction of a series of feedlots and an abattoir in China to fatten and process Australian cattle and market the beef from those cattle.

“An important part of Wellard’s business development strategy in China was teaming up with an established and highly regarded local company,” Wellard Chief Operating Officer Scot Braithwaite said

“Fulida is a well-respected company within China which can contribute capital, strategic business relationships and intellectual property, which is evident by its substantial fibre manufacturing and distribution business.

“The Wellao JV with Fulida delivers that first important plank in a strategy that will bring significant benefits to both Wellard and stakeholders in Australia and China in the live cattle and chilled beef sector.”

Fulida Group Vice President and Managing Director of the Wellao JV Kanda Lu said Fulida’s decision to partner Wellard was based on important supply and demand fundamentals.

“The unprecedented growth of the Chinese economy means more customers are willing to pay more for premium goods,” Mr Lu said.

“Chinese consumers are concerned about food quality and safety, and therefore there is a strong demand for reliable and reasonably-priced beef. Australian cattle and beef fit that requirement.

“On the supply side, Wellard is the bellwether of international livestock trading so our JV project will benefit from its global resources, including access to one of the largest and most modern livestock fleet in the world, and an extensive agri-production base in Australia.

“We predict the JV will be a success story for the Chinese agriculture industry and we have no doubts that a long-term and stable demand for beef cattle will benefit both the Australian industry and their famers as well.”

The JV’s principal objective is to take advantage of the animal health protocol and the Free Trade Agreement recently signed between Australia and China for the live export of slaughter and feeder cattle through the establishment of a live export, feedlotting, processing and beef distribution business.

Its planned export of Australian beef to China will help to establish systems and long term customers while the live cattle infrastructure is being designed and subsequently built.

“Teaming up with Mr Qi, chairman of Fulida, and his team has been a terrific step in providing access to the large Chinese market, so the Wellao JV’s plans tie perfectly into our vertical integration strategy ,” Wellard CEO Mauro Balzarini, said.

“Reaching the amazing number of 400,000 cattle exported in the recent financial year has proven Wellard can do big things. With our growth strategy gathering pace, I have no doubt we can deliver on what it is one of the most exciting markets in our region.”

“Fulida will seize this great opportunity of developing strategic partnership with Wellard and devote its full resources and efforts into the ‘agribusiness and food’ sector, in the aim of forming the Group's second core business next to its ‘fibre and textile’ sector by 2020,” said Fulida Chairman Jianer Qi.

Wellard is a world leader in the production and distribution of livestock and grain.

Its two largest subsidiaries are Wellard Rural Exports, Australia’s largest livestock exporter and ship owner, and Wellard Agri, a large mixed farming land owner and operator specialising in the production of grains, legumes and livestock.

Wellard Rural Exports has supplied quality dairy and beef cattle and sheep and goats to the world for more than 30 years, and its investment in the live export industry is without peer. Based in Fremantle, Western Australia, the company’s operations cover every aspect of the export chain, including feed milling, livestock aggregation, road transport, feedlot facilities throughout Australia and modern shipping.

The company’s flagship carrier, the MV Ocean Drover (formerly the MV Becrux), is a purpose-built livestock carrier capable of carrying 75,000 sheep or 18,000 cattle to major markets around the globe. She was commissioned in 2002.

Two, technologically advanced, purpose-built vessels, the MV Ocean Swagman and the MV Ocean Outback, were launched in 2010. They offer unparalleled levels of safety for the livestock, crew and vessel, and can transport 7000 cattle, 25,000 sheep, or a combination of both.

Wellard’s abattoir, Beaufort River Meats, processes up to 2500 sheep and lambs a day, enabling Wellard to meet customer demand for both livestock and chilled and frozen meat.

Wellard Agri owns and operates eight farms covering 35,700 hectares across three principal agri-hubs. The two northern hubs are located at Dongara and Watheroo in Western Australia’s central midlands and one is located at Kojonup in the Great Southern region of WA.

Background – Fulida Group

Fulida Group is an integrated player in the global textile industry, with total assets in excess of AUD4.2 billion.

Its businesses operate throughout the entire industrial chain, from R&D of advanced materials, to manufacturing and processing of forest products, dissolving pulp, specialty cellulose products, rayon stable, specialty yarn, dyeing products, to distribution of the products across the globe.

The core businesses are supported by Fulida's investments in co-power generating, logistics, waste treatment and industrial estate development, and upstream offshore investments in Canada and Russia.